Struggling hotels, restaurants and nightclubs are calling for more financial help with business rates after it emerged that Heathrow is among the biggest beneficiaries of a multibillion-pound package of state support.
The UK’s biggest airport is in line for a discount of nearly £900m on its rates bill over the next three years. That is a fifth of the total £4.3bn “transitional relief” fund announced by the chancellor in the budget for all businesses facing big bill increases.
Heathrow’s rates bill will still rise by £50m to £171m this year, according to figures compiled by the property firm Avison Young and first reported by the Sunday Times. The airport has one of the highest rateable values in the country.
Had the government not stepped in, Heathrow’s business rates bill would have leapt to £512m in the upcoming fiscal year, £514m the year after and £523m the year after that, taking the total over the next three years to £1.5bn. Reliefs over this period will take the aggregate to £650m, thanks to transitional relief of £898m.
While Heathrow, which is owned by a collection of overseas sovereign wealth and pension funds, is getting less support in percentage terms than a local pub, the total value of its package dwarfs the £80m in additional discounts offered to pubs and live music venues in England this year.
Hotels, restaurants, nightclubs and cafes did not get any additional support on top of transitional relief that capped rises in business rate bills at 15% for most companies this year – or £800 for the smallest – as pandemic-era reliefs come to an end and property revaluations take effect. That relief gradually reduces over the following two years.
The Night Times Industries Association (NTIA) has complained that the government is “explicitly excluding” nightclubs, grassroots electronic music and recorded music venues from additional help on business rates offered to pubs and live music venues last month.
Michael Kill, the chief executive of the NTIA, which represents thousands of bars, nightclubs and pubs, said the bill increases could lead to more closures.
“We have already lost over a third of the UK’s nightclubs, yet the venues that remain are being charged higher business rates than ever, with fewer businesses left to carry the burden and no access to relief,” he said. “This is not targeted support, it is policy that actively accelerates decline.”
Kate Nicholls, the chair of UKHospitality, which represents thousands of restaurants, hotels and pubs, said: “These figures are damning in showing how crazy, distorting and broken business rates is. Successive governments have promised root and branch reform – these figures show it is time to deliver.”
The NTIA said the number of nightclubs had fallen by a third since 2017 but the value of their properties had risen, so that the industry as a whole would pay more in business rates.
The industry said it was already under pressure from cost increases including the rise in the minimum wage, the rise in energy costs and higher duty on alcohol, which it said was likely to push up drinks prices.
“With alcohol duty rising in line with inflation and supplier costs continuing to increase, many businesses have little choice but to pass these costs on to consumers – despite already fragile trading condition,” Kill said.
While airports will get a chunky share of transitional relief, Karen Dee, the chief executive of AirportsUK, the trade association for UK airports, said business rates increases were likely to mean price rises for flyers and less investment in airports.
Dee said: “The chancellor has staked the UK’s growth on airports, and while the changes to transitional relief are very welcome, the sector’s business rates will still increase by over 100% and could force some to review billions of pounds of transformational investments across the UK and potentially puts thousands of jobs at risk in the longer term.”
